After some rocky years, the UK organic sector has reason to be cheerful again, according to data published on by the Soil Association, the local body that administrates and promotes the organic sector in the country.
The mood among the Soil Association leadership and representatives of companies working in the sector at last week's launch of the figures was bullish, and with some justification. Growth in sales of organic products rose by 4% in 2014 to GBP1.86bn (US$2.87bn), against an overall decline in the food market of 1.1%.
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Helen Browning, the Soil Association's chief executive, hailed a "third year of steady growth", insisting reports of organic food's demise in the UK had been "premature". The Soil Association predicts continued growth at around 4% a year, which would mean returning to the GBP2bn mark in 2016.
Those seeking an easy explanation for this reversal of fortune would no doubt look at the economic cycle. Things began to go awry for the organic market in 2008/9, and between 2008 and 2011, sales fell from GBP2.11bn to GBP1.67bn. Organic products are more expensive, so it follows that as belts are loosened sales will pick up.
However, the organic market rarely lends itself to simplistic analysis, and just putting the growth down to the economic recovery would certainly not tell the whole story.
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Speaking to just-food, Soil Association trade consultant Finn Cottle says the economic recovery is certainly "one element that has helped the upturn" but points to steady and consistent growth through the good and bad economic times in the online market and through independent retailers. Sales through independent online retailers and box schemes rose by 12% in 2014 to reach GBP216m.
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By GlobalDataThe Soil Association, meanwhile, pointed to "booming" sales in the organic catering sector, which saw growth of 13.6% to a record GBP55.8m in 2014. Here, of course, there could be a post-recessionary bounce as people eat out more when economies are moving out of recessions, but pivotal to the growth in organic catering has been the Soil Association's Food for Life Catering Mark, which has boosted sales of organic food in schools, nurseries, universities, hospitals and workplaces.
There are also structural factors at play which are positive for the organic market. Organic is undoubtedly benefiting from changes in shopping habits and the shape of the food retailing sector, in particular the decline in the big weekly superstore grocery shop and the growing trend for shopping more frequently – and locally – for food.
Cottle says "top-up shopping" definitely offers an opportunity for the organic market. The growing readiness on the part of consumers at large to shop in local food stores, delicatessens or health food shops "bodes well", and is a trend "we're quite excited about".
The degree to which this represents "mainstreaming" of the organic market is an interesting question as it requires examination of what constitutes the organic food consumer. Received wisdom and cultural stereotyping suggests the organic consumer is incredibly easy to characterise, with trappings such as sandals, facial hair and copies of The Guardian featuring prominently in descriptions.
In fact, the organic consumer is far more difficult to pigeon-hole. Moreover, the recent growth could suggest the organic market is expanding to encompass a broadening range of consumer groups and motivations.
Cottle points out that the organic market is, contrary to perception, "very evenly" spread through the socio-economic groups, with a third of organic consumers coming from the A and B brackets, one-third from C1 and a third from C2, D and E.
Defining the organic consumer through a consistent purchase motivation is equally problematic. Cottle describes four main factors prompting consumers to buy organic. There are those consumers motivated by "global citizenship", whether with regard to animal welfare or the environment.
While organic companies are restricted about what they can say in terms of the health attributes of their products – underlining that the case for those health benefits is somewhat tenuous – there are, says Cottle, "definitely individuals who see organic as providing a better health solution for them, and that's a growing percentage of people who are buying into organic".
In addition, there are consumers who see organic as a "stamp or endorsement of quality, real food", whether that it is seen purely in terms of quality and taste or higher product integrity and more stringent traceability in the supply chain.
Looking at current dynamics in the food sector, such as concern over food integrity, dietary health and interest in real and slow food, it is clear organic ticks multiple boxes, and in that context the growth being seen should surprise nobody.
In view of this, a better question to pose might be why did the organic sector suddenly nosedive in the UK, particularly as growth seems to have continued steadily in other European markets. Organic marketers feel that supermarkets, particularly Tesco, were too swift to retrench in 2008/2009 which accentuated the downturn. There was almost a sense at the Soil Association event last week that the organic sector had taken this lack of faith a little personally, and from some even a little schadenfreude that things have gone none too well for the UK's largest food retailer in the intervening years.
The degree to which supermarkets may have overreacted to the initial softening in the organic sector, creating a self-fulfilling prophesy, is difficult to judge. What is more certain is that the opposite dynamic, where increasing interest in organic by supermarkets will foster growth, is now in evidence.
Cottle says broadening ranges and more facings for organic products in supermarkets are a key factor helping the market revival. Sales through multiple retailers grew for the second successive year in 2014, by 2.2% to GBP1.3bn. The positive environment is also boosting new product development. "Innovation is picking up again as well, so we're seeing new products," Cottle adds.
Moreover, Cottle believes organic is growing and building momentum without eroding its price differential with mainstream products. The growth seen in some of the highly branded sectors of the organic market, such as yoghurt and baby food, where price competition could be attributed to promotional activity and parity pricing with mainstream products. However, the organic sector has also seen strong growth in poultry (+ 8.2% in 2014), and eggs (+15.8% in 2014) where the strong premium positioning for organic is firmly set. Cottle adds the organic sector "has not had such a pronounced deflation" as seen in the mainstream food market, which further bolsters its price positioning.
The robustness of organic pricing may well attract more farmers to embrace organic, which represents another positive structural factor for the market. In addition, there will be new Common Agricultural Policy support payments for organic farmers coming on stream in January 2016.
The organic farming sector has contracted during recent years but the market recovery is likely to reverse that trend, ensuring that the sector has the capacity to meet growing demand. Cottle believes the sector can sustain "smooth and constant" growth of at least 4% a year beyond 2016 up to 2020, and given the numerous tailwinds it is hard to disagree.
